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2015 (11) TMI 1576 - ITAT DELHI

2015 (11) TMI 1576 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - voluntary surrender of income by assessee - Held that:- Undisputedly, penalty proceedings as well as assessment proceedings are to be decided independently and the penalty proceedings are not to be influenced by the assessment proceedings. In the instant case, no doubt, assessee has surrendered the income of ₹ 40,00,000/- during search and seizure operation but Hon’ble Apex Court in the judgement CIT Vs Suresh Chandra Mittal ( .....

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at surrender of income of ₹ 40,00,000/- during the assessment year 2007-08 was in fact not generated during the year under assessment rather it being a forfeiture of sale amount as income for the assessment year 2006-07, assessee has bona fidely surrendered the same. - So, as a sequel to the discussion made in the preceding paragraphs, we are of the considered view that the A.O. has failed to make out the case of concealment of particulars of income or furnishing of inaccurate particul .....

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I KULDIP SINGH, JUDICIAL MEMBER. Appellant by : Ms. Kesang Y. Shirpa, Sr. DR. Respondent by : Sh. Ashish Goel, CA and Sh. Pranjal Srivastava, Advocate. ORDER PER KULDIP SINGH, JM: The appellant, ACIT, Central Circle I, Faridabad (hereinafter referred as revenue ), by filing the present appeal, sought to aside the impugned order dated 04.07.2011 passed by Ld. CIT(A) I, Ludhiana qua the assessment year 2007-08, on the grounds inter alia that: 1. On the facts and in the circumstances of the case, t .....

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cable to this case and where it is clearly mentioned that income declared in any return of income furnished on or after the date of search, assessee shall be deemed to have concealed the particulars of income or furnished inaccurate particulars of such income for the purposes of imposition of penalty under clause (c) of sub - section (l) of section 271. 2. Briefly stated, the facts of this case are that a search and seizure operation was conducted at the corporate/administrative office premises .....

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sessee s group has received a cash of ₹ 1,15,00,000/- against sale of some land at Rewari. On calling upon his explanation, the assessee surrendered the cash of ₹ 1,15,00,000/- as undisclosed income in the hands of aforesaid three companies of Orris group. 4. During assessment proceedings, assessee was called upon to furnish necessary details and to explain in respect of aforesaid transaction and has filed reply and claimed that aforesaid companies have sold the aforesaid land in Sep .....

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ice u/s 271(1)(c) of the Act was served on the assessee who has filed reply after availing numerous opportunities. Penalty officer on the basis of record and reply furnished by the assessee, came to the conclusion that the assessee has no explanation for concealing the income/furnishing inaccurate particulars of income to the extent of ₹ 40,00,000/- and subsequently, imposed minimum penalty of ₹ 13,46,400/- i.e. 100% of the tax evaded. The assessee challenged the penalty order before .....

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CIT(A) and contended inter alia that there is no concealment of income rather assessee surrendered the income to buy peace of mind and to avoid protracted litigation; that since the surrendered amount itself is not being eligible to tax, there cannot be any question of concealment or furnishing of inaccurate particulars of income and relied upon the judgement cited as CIT Vs Suresh Chandra Mittal, 251 ITR 09 (S.C.) and CIT Vs Harh Talwar (2011), 335 ITR 200 (Del.) and CIT Vs SAS Pharmaceuticals .....

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e premises of Orris group companies an amount of ₹ 1,15,00,000/- was found to have been received in cash by the company of the assessee by virtue of agreement to sell out of which, assessee has surrendered an amount of ₹ 40,00,000/- which was added to his taxable income; that in pursuance to notice u/s 153C, the assessee filed return declaring income of ₹ 39,76,600/- on 05.11.2009. 10. Ld. CIT(A) in para 6 & 7 of the impugned order came to the conclusion that since the surr .....

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only on the basis of the statement made by the Director of the assessee company and an independent factual /legal appreciation of the facts of the case lead only to the logical conclusion that there was no income on account of cash received in pursuance of agreement to sell for financial year 2006-07 and as such, there cannot be any concealment of the same. Ld. CIT(A) in the impugned order, has concluded as under: I have considered the facts of the case and the basis upon which the AO proceeded .....

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appellant has taken the arguments that the receipt of cash in pursuance of an agreement to sell the land of the assessee company did not amount to generation of income for the A/Y 2007-08 It has been claimed that what was received was merely 'an advance and the transactions of sale of land to the buyer did not take place till date. The AR has filed copies of account of the Balance Sheet, wherein, the impugned piece of land stands reflected in the Stock-in-Trade of the company. This only mea .....

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form of forfeiture of the same. It was also suggested that since no evidence of forfeiture of the said amount in the F/Y 2009-10 had been filed it could be easily concluded that the said forfeiture actually happened in F/Y 2006-07 and same was in the knowledge of Shri Vijay Gupta and that is why he agreed to disclose the same as income for the F/Y 2006-07 as on the date of Search i.e. 13th March, 2008. The AR in response to this submitted his arguments that neither the receipt of advance nor it .....

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iture did not materially effect the taxable income. The AR placed reliance upon the provisions of 5.51 of the LT. Act in support of his arguments. The AR therefore concluded his argument that since no sale actually took place therefore, the advance received in terms of agreement to sell did not constitute taxable income and therefore disclosure of same during search operation was only meant to buy peace and therefore can only be described as voluntarily in nature. 7. I am in agreement with the a .....

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l/legal appreciation of the facts of the case lead only to one logical conclusion that there was no income on account of cash received in pursuance of agreement to sell for F/Y 2006-07 and therefore, there cannot be any concealment of same. It needs to be understood that to prove concealment of income firstly the existence of taxable income will have to be established. It is clear that there was no income on the basis of the facts of the case and the amount returned by the appellate company in i .....

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essment on merits, but limiting the claim for relief to cancellation of penalty, since a valid assessment/re-assessment is foundation for a valid penalty. In the present case the mount declared/surrendered for taxation by the assessee company is not at all taxable. The said amount was treated as taxable income by the Assessing Officer just due to the reason that the same was declared as income by the assessee company in its return of income filed in response to notice u/s 153C of the LT. Act 196 .....

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filed showing higher income. In penalty proceedings under section 271, assessee claimed that he had offered additional income to purchase peace and avoid litigation. Penalty orders were passed and Commissioner (Appeals) confirmed the orders. The Tribunal held that the department had not discharged its burden of proving concealment and no penalty can be levied. The High Court held that no penalty could be levied for concealment on the facts found by the Tribunal. On further appeal the Supreme Co .....

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n of penalty u/s 271(1)(c) and the same is deleted. 11. Ld. CIT(A) relied upon the judgement in the case of CIT Vs Suresh Chandra Mittal (supra). Hon ble Apex Court has decided the identical issue in the case cited as CIT Vs Suresh Chandra Mittal (supra), the operative part of which is reproduced as under: PENALTY - CNCEALMENT OF INCOME-ASSESSEE INITIALLY FILING RETURNS WITH MEAGRE INCOME- FILING REVISED RTURNS SHOWING HIGHER INCOME AFTER SEARCH AND NOTICE FOR REOPENING ASSESSMENT, TO PURCHASE P .....

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8. In penalty proceedings under section 271, the assessee claimed that he had offered additional income to buy peace of mind and avoid litigation. Penalty orders were passed and the Commissioner (Appeals) confirmed the orders. But the Appellate Tribunal held that the Department had not discharged its burden of proving concealment and had simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, and that penalty could not be levied. On a reference, the Hig .....

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